Right-Wing Gains in Amazon States Raise Environmental Policy Risks After Brazil’s First Round

Why it matters: The Amazon’s political map is shifting decisively toward leaders who have historically favored weakening environmental enforcement, at a moment when Brazil’s climate credibility depends on demonstrating that deforestation reductions achieved since 2023 are durable. State governments control environmental licensing agencies, state-level police enforcement against illegal mining and logging, and land-use planning, meaning that federal policy alone cannot protect the biome if governors choose not to cooperate.

What changes for companies operating in or sourcing from the Amazon

For Brazilian and multinational companies with supply chains touching the Amazon, this political realignment introduces concrete regulatory risk. The European Union’s Deforestation Regulation (EUDR), which requires proof that commodities were not produced on land deforested after December 2020, depends partly on effective local enforcement to maintain traceability. If state-level environmental agencies are defunded or restructured under new governors, the verification infrastructure that companies rely on (such as the Rural Environmental Registry, known as CAR, and state-level monitoring systems) could weaken. Companies exporting soy, beef, timber, or minerals from these states may face greater scrutiny from European importers and higher compliance costs to fill gaps left by reduced state oversight.

Brazil’s own regulatory framework adds another layer. The National Environment Council (CONAMA) sets federal standards, but environmental licensing for most land-use activities is executed at the state level through agencies like SEMA (Secretaria de Estado do Meio Ambiente) in each state. Governors appoint the heads of these agencies and set their budgets. During Jair Bolsonaro’s presidency (2019-2022), several Amazon states saw sharp reductions in environmental fines issued and enforcement operations conducted. According to Adriana Ramos, executive director of the Socioambiental Institute (ISA), the new political configuration risks repeating “the expansion of illicit activities, the presence of organized crime, and the loss of control over natural resource exploitation” that characterized that period.

What remains undecided and who stands to lose

Several critical outcomes remain open. The second round of the presidential race between Lula (PT) and Flávio Bolsonaro (PL) will determine whether federal agencies like IBAMA and ICMBio retain their current enforcement posture or face a repeat of the systematic dismantling seen between 2019 and 2022. Second-round gubernatorial races in Acre (between two conservative candidates), Tocantins, and Amazonas will define whether the right-aligned bloc extends to eight or all nine states. Even Maranhão, where governor-elect Eduardo Braide (PSD) has maintained neutrality, could tilt depending on post-election coalition dynamics.

The groups most directly affected, as noted by Indigenous Peoples Minister Eloy Terena, are indigenous communities, quilombolas, and riverside populations. These groups depend on the enforcement of territorial protections that are administered at both federal and state levels. Governors who prioritize opening protected territories to economic exploitation, particularly mining and agribusiness, create direct pressure on demarcated indigenous lands and conservation units. On the other side, agribusiness interests and mining operators in states like Mato Grosso and Pará stand to benefit from relaxed licensing timelines and reduced enforcement actions.

For ESG-focused investors, the political shift complicates the thesis that Brazil’s environmental governance has stabilized. Portfolio exposure to Amazon-linked commodities now carries heightened political risk regardless of federal policy direction, because state-level rollbacks can undermine deforestation targets even if Brasília maintains its current course.

via Mongabay Brasil